Minnesota is known for its real estate, and the Twin Cities are no exception. The real estate market in the Twin Cities Metro is expected to be strong in 2023 as the area continues to experience growth.  As we anticipate the 2023 market, let's take a moment to look back on 2022 and what the market has done this year!

AVERAGE SALES PRICE: The average sales price increased by about 6%, from $393,367 at the end of  2021 to $419,505 at the end of 2022. The average sales price has increased every year since 2012 when it was just under $149,900. This is due to the steady decline in inventory.

AVERAGE DAYS ON MARKET: In 2022, the average days on market for homes listed in Minnesota was only 27 days. That's 5 times shorter than what it was in 2010! Median days on market will remain around 30 days through 2023 as inventory continues to remain flat.  At the beginning of 2010, there were 26,000 homes for sale. This number has steadily declined year over year to the current number of 7,000 and continues to plateau.

NEW LISTINGS:  New listings are down 9% year-over-year. This greatly impacts home prices. If there are lots of homes available for sale and not enough buyers, then prices will likely fall; if there aren't enough homes for sale and lots of buyers, then prices will rise. This means we can expect to see home prices continue to increase until inventory starts to increase.

MONTHS SUPPLY: The monthly supply has continued to decrease year over year, there simply aren’t enough homes to keep up with the demand. Since 2010 the monthly supply went from 6.9 and has steadily declined to 1.4 at the end of 2022. Months of supply are expected to remain at 1 month or less throughout 2023 as new listings are expected to continue to decrease or remain flat.

INTEREST RATES: Interest rates started at around 3% at the beginning of the year and have doubled to over 6%. This had a large effect on affordability for many buyers. For example, let's say a buyer was looking to stay at a monthly payment of around $2,000 per month. At the beginning of the year with a 3% interest rate, this buyer could afford a $475,000 home. Now, with interest rates hovering over 6%, the same buyer can afford a $350,000 home.

RENTAL PRICES: Just as home values have increased significantly due to inventory shortages, rentals are experiencing the same increase in pricing. In 2022, rental prices have increased 15% year over year. (Rentometer.com)